Ramco Systems Limited
REPORT ON THE AUDIT OF STANDALONE FINANCIAL STATEMENTS
OPINION
We have audited the accompanying Separate (“Standalone”) Financial Statements drawn in accordance with the Indian Accounting Standards of Ramco Systems Limited (“Company”), which comprise the Balance Sheet as at 31 March 2026, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Cash Flow Statement for the year ended on 31 March 2026 and a notes to the Standalone Financial Statements, including material accounting policies and other explanatory information (“Standalone Financial Statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 (‘Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Indian Accounting Standards, of the State of Affairs (“Financial Position”) of the Company as at 31 March 2026, its Profit (“Financial Performance including Other Comprehensive Income”), Changes in Equity and its Cash Flows for the year ended on that date.
BASIS FOR OPINION
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (“SAs”) specified under section 143(10) of the Act. Our responsibilities under those SAs are further described in the Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the Standalone Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial Statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit
of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.
1. Intangible Assets - Product Software and Technology Platform
Basis for identification as a Key Audit Matter
The Company’s two principal intangible assets are “Product Software” and “Technology Platform.” Product Software comprises costs incurred in developing the product and enhancing its functionality, capitalised upon completion of the development phase. Technology Platform captures costs of building and upgrading the platform framework that enables the Company to deliver both standard and customised solutions. Both assets are disclosed under Intangible Assets in the financial statements.
The combined carrying value of these assets as at 31 March 2026 is Rs. 3,470.82 Mln (PY: Rs. 3,484.09 Mln), representing a significant portion of the Company’s total asset base.
We identified this area as a Key Audit Matter on account of the following risks:
• Impairment risk: These assets operate in a rapidly evolving technology environment. Recoverability depends on future cash flow projections and the continued commercial viability of the underlying technology, both of which involve significant estimation uncertainty.
• Useful life and amortisation: Determining the appropriate useful life and amortisation methodology requires judgment. Shifts in technology, market dynamics, or usage patterns could alter estimated useful lives and, consequently, amortisation charges.
• Capitalisation: Correctly distinguishing capital expenditure from revenue expenditure, and ensuring that only qualifying costs are capitalised in accordance with Ind AS 38, involves the application of specific criteria and management judgment.
Our Audit Response
We assessed the end-to-end process for capitalisation, amortisation, and impairment of Product Software and Technology Platform. Our work included the following procedures:
• Capitalization: We evaluated management’s process for identifying and segregating qualifying development costs, and tested a sample of capitalised items to verify compliance with the recognition criteria under Ind AS 38.
• Amortization: We assessed the reasonableness of the ten-year useful life adopted by the Company, having regard to the nature of the assets, historical usage patterns, and the technology landscape.
• I mpairment: We validated the carrying value by examining the business forecasts and revenue projections underpinning management’s impairment assessment. Specifically, we:
• Assessed the functional and technical architecture of the Product Software and Technology Platform, and evaluated whether the assumed revenue-generating capability remains reasonable.
• Challenged the key assumptions in the cash flow models, including revenue growth rates, by comparing forecast targets against historical performance and management-approved business plans.
• Reviewed the firm order book at multiple reporting dates and traced revenues generated from these assets to corroborate recoverability.
Based on our procedures, we are satisfied that the carrying value of these intangible assets is appropriately stated and that the related disclosures are adequate.
2. Investment in Overseas Subsidiaries
Basis for identification as a Key Audit Matter
The Company holds equity investments in several overseas subsidiaries, with a carrying value of Rs. 4,063.26 Mln as at 31 March 2026 (PY: Rs. 4,063.26 Mln). Management classifies these investments as long-term, strategic, and integral to its commercial objectives.
We identified this as a Key Audit Matter given:
• Valuation complexity: Assessing the recoverability of these investments requires evaluating each subsidiary’s financial performance, the economic conditions in its operating jurisdiction, and risks such as political instability, regulatory change, and currency exposure.
• Regulatory and compliance risk: Each subsidiary operates within its own legal and regulatory framework. Non-compliance with local laws or accounting standards could have financial reporting implications.
• Materiality: The aggregate investment represents a substantial component of the Company’s balance sheet.
Our Audit Response
We evaluated the carrying value of investments in subsidiaries by examining whether any indicators of impairment exist. Our assessment took into account the following:
• We considered the strategic rationale for each subsidiary - specifically, that these entities were established to satisfy customer requirements for contracting with local entities and to meet host-country work-permit obligations when deploying the Company’s personnel.
• We examined the operational inter-dependencies between the Company and its subsidiaries, including the flow of resources, revenues, and services, to understand the basis on which value is derived from these investments.
• We reviewed the cumulative retained earnings of each subsidiary and assessed the overall impact on the Company’s financial position.
Based on our evaluation, we concur with management’s assessment that the carrying value of these investments is supported and that no impairment provision is required at this stage.
3. Revenue recognition and Trade receivables Basis for identification as a Key Audit Matter Revenue recognition
The Company recognises revenue from multiple
streams, each governed by distinct recognition criteria:
• SaaS services, product support, and application maintenance: Recognised on a straight-line basis over the contract term.
• Managed services: Recognised as and when the related services are performed.
• Fixed-price contracts: Recognised using the percentage-of-completion method, with completion measured by reference to costs incurred relative to total estimated project costs (input method), in accordance with Ind AS 115.
• Time-and-material contracts: Recognized based on billable time at contractual rates.
• Software licences: Recognized on delivery, upon the customer obtaining the right to use the licence.
• Royalties and services to subsidiaries: Recognised at arm’s-length pricing.
Revenue recognition involves complex contractual arrangements, estimation of project completion, and the consistent application of accounting policies
across contract types. This gives rise to a risk of error or misstatement.
Trade Receivables
Trade receivables as at 31 March 2026 stand at Rs. 652.09 Mln (PY: Rs. 572.27 Mln), of which Rs. 475.24 Mln (PY: Rs. 300.15 Mln) is receivable from sixteen subsidiaries. Estimating the expected credit loss (ECL) provision involves judgment regarding recoverability, historical collection patterns, and prevailing economic conditions.
Our Audit Response Revenue recognition
We audited revenue recognition across all material streams:
• For SaaS, product support, and application maintenance, we verified contractual terms and confirmed that revenue is recognised on a straight-line basis consistent with the Company’s policy.
• For managed services, we tested delivery of services against underlying agreements.
• For fixed-price contracts, we assessed the automated revenue recognition system, which calculates completion based on a weighted cost-of-effort methodology. We tested the system’s logic and verified that project estimates are updated appropriately, using a risk-based sample of ongoing projects.
• We evaluated the design and operating effectiveness of internal controls over invoicing, milestone-based billing, and customer contract compliance.
• We reviewed the Company’s process for identifying onerous contracts and tested the adequacy of provisions raised in respect of such contracts.
Trade receivables
We reviewed the Company’s credit risk management policy and assessed its consistent application. Our procedures included:
• Substantive testing of selected receivable balances, including review of underlying contract terms, execution status, and evidence of subsequent receipts.
• Assessment of the ECL provisioning policy adopted by the Company and evaluated its consistent application across the portfolio.
• Specific review of inter-company receivables from subsidiaries, having regard to the trading activity, settlement history, and financial position of each entity.
Based on the above, we are satisfied that revenue is recognised in accordance with Ind AS 115 and that the ECL provision on trade receivables is reasonable.
INFORMATION OTHERTHAN STANDALONE FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON
The Company’s Management and Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, the Board’s Report including Annexures to Board’s Report, Business Responsibility and Sustainability Report, Corporate Governance and Shareholder’s Information, but does not include the Standalone Financial Statements, Consolidated Financial Statements and our audit report thereon.
Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
I n connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements, or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report on in this regard.
MANAGEMENT’S RESPONSIBILITIES FOR THE STANDALONE FINANCIAL STATEMENTS
The Company’s Management and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation of
the Standalone Financial Statements that give a true and fair view of the Financial Position, Financial Performance (including Other Comprehensive Income), Changes in Equity and Cash Flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified under Section 133 of the Act, read with relevant rules issued there under. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate Internal Financial Controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Financial Statements, Management and Board of Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management and Board of Directors, either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We, also:
i. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
ii. Obtain an understanding of Internal Financial Controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has an adequate Internal Financial Controls system in place and the operating effectiveness of such controls.
iii. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
iv. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our audit report. However, future events or conditions may cause the Company to cease to continue as a going concern.
v. Evaluate the overall presentation, structure, and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in:
i. Planning the scope of our audit work and in evaluating the results of our work; and
ii. To evaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our audit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”) issued by the Central Government of India in terms of Sub-Section (11) of Section 143 of the Act, we give in the ‘Annexure A’ a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, based on our audit, we report, to the extent applicable, that:
a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
d. In our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e. On the basis of the written representations received from the Directors as on 31 March 2026 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2026 from being appointed as a Director in terms of Section 164 (2) of the Act.
f. We have enclosed our report in “Annexure B” with respect to the adequacy of the Internal Financial Controls over financial reporting of the Company and the operating effectiveness of such controls. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s Internal Financial Controls over financial reporting.
g. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations/claims against the Company as at 31 March 2026 on its financial position in its Standalone Financial Statements - Refer Note No. 32 in the Standalone Financial Statements.
ii. The Company did not have any long-term contracts including derivative contracts, for which there were any material foreseeable losses.
iii. There were no amounts that were required to be transferred by the Company to the Investor Education and Protection Fund.
iv. (a) The management has represented
that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kinds of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding whether recorded in writing or otherwise, that the Intermediary shall:
• Whether directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the Company (“Ultimate Beneficiaries”), or
• Provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall:
• Whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”), or
• Provide any guarantee, security, or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on the audit procedures as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (iv)(a) and (iv)(b) contain any material misstatement.
v. There is no dividend declared or paid during the year by the Company and hence the requirement of compliance with Section 123 of the Act does not arise.
vi. The Company is using an integrated software for maintaining its books of
accounts, which has a feature of recording audit trail (edit log) facility. The same has been in operation throughout the year for all relevant transactions. Based on our examination, which included test checks performed by us, for the financial year ended 31 March 2026, we did not come across any instance of the audit trail feature being tampered with. Additionally, the audit trail has been preserved by the Company as per the statutory requirements for record retention.
h. With respect to the matter to be included in the Audit Report under Section 197(16) of the Act:
I n our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its Directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any Director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) of the Act which are required to be commented upon by us.
For M.S. Jagannathan & N. Krishnaswami
Chartered Accountants Firm Registration Number: 001208S
S. Srivatsan
Partner
Membership Number: 021880 UDIN: 26021880WNKHAD9156
Bengaluru 21 May 2026
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